As Mt Gox Continues Legal Proceedings, Creditors Warn Major Sale Could Drop Bitcoin Fork Prices Drastically

Even though the trauma of Mt. Gox is five years old, that has not stopped Mt. Gox Legal from pursuing the compensation that is due to the victims. Mt. Gox Legal is a group that involves 1,000 creditors from the Mt. Gox platform that is working to rekindle their losses. According to documentation found by CoinDesk, the group has created a draft proposal, regarding how they collectively want the remaining assets paid out to them.

The trustee for Mt. Gox, Nobuaki Kobayashi, had released information this week regarding how much secured cryptocurrency (Bitcoin and Bitcoin Cash) and fiat currency is approved to be paid out to the creditors. This payout is part of the civil rehabilitation process for the exchange. Presently, there is 69,553,086,521 Japanese yen ($629,594,540) in fiat holdings, 141,686.35 BTC, and 142,846.35 BCH. The two cryptocurrency amounts are worth an estimated $593 million.

While this number would otherwise be impressive for retrieving the lost assets, there is still plenty more, and Kobayashi remains hopeful that more assets will be uncovered. While in this process, the estate is seeking out money owed to the creditors from other sources as well, including majority owner of Mt. Gox – Tibanne Co. – and former CEO Mark Karpeles. So far, the documentation of the trustee shows that claims have been approved for 802,521 BTC (worth $3,233,256,500), 792,296 BCH ($124,953,000), $38,165,664 in U.S. dollars, amongst other amounts in other fiat currencies.

Unfortunately, there is still a problem – the cryptocurrency that has been secured for reimbursement is significantly less than the approved claims in BTC and BCH holdings. There is also not enough fiat currency to cover that rate for the cryptocurrency in cash. At this point, there is no clarity on the way that Kobayashi will be allotting funds to the creditors, though he has set April 26th, 2019 as the deadline for receiving a rehabilitation plan proposal.

The legal plan for Mt. Gox, which the creditors are clear is not a rehabilitation plan under the eyes of the formal laws in Japan, includes the distribution of coins that have forked from Bitcoin since Mt Gox collapsed. Other currencies involved are BitcoinX (BCX), Bitcoin Diamond (BCD), Lightning Bitcoin (LBTC), Bitcoin Private, Super Bitcoin (SBTC), Clams, Bitcoin Interest, Bitcore (BTX) and Bitcoin Atom.

In the eyes of the creditor group, the amount of cryptocurrency in these exchanges would be more than any exchange could handle. The private keys alone would be far too much to manage. In the draft, the group adds that they are concerned that the sale of all of these cryptocurrencies for the recollection of funds would do a significant amount of damage to Bitcoin value, causing the “downward movement of the value,” which would not be in the best interest of the creditors. Instead of directly selling the tokens, the creditors suggested auctioning off the private keys after distributing the BTC and BCH to a secure place.

Other items are included in the draft proposal that the member creditors would like to see moved along by the trustee. The funds that are presently held in fiat currency have been requested to be paid out at the same rate that they would be paid out if the platform was in the middle of bankruptcy proceedings. The draft states that this payout would include interest payments where the law allows.

The group added that they expect a mix of cash and crypto to be leftover after the distribution of cash, which they wish to be paid “pro-rate to bitcoin claims.” They also wish to be offered a choice between receiving crypto in accounts with exchanges or into private wallets.

Furthermore, unlike what has happened in the past, the group wants the trustee to avoid sale or purchase of Bitcoin and Bitcoin Cash. Furthermore, the shareholders including Karpeles, Jeb McCaleb, and Tibanne should not be a part of any payouts. Karpeles has been quoted as saying that he is not interested in the Gox funds.

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